Where Manhattan’s Sublet Availability Is Headed

Manhattan’s overall sublet availability slid to 10,475,178 square feet in July 2011, its lowest level since it stood at 9,312,836 in September 2008. Total sublease availability shot higher very quickly after that month (due in large part to the Lehman Brothers debacle and the ensuing financial crisis), climbing to 17,325,712 square feet, a whopping 86 percent, just eight months later (May 2009).

Today, we are well below the monthly average for the past 10 years—12,813,963 square feet—although we are currently almost twice as high as the low point during that same period, the 5,655,221 square feet achieved in December 2007. If we go even further back, past the last two recessions, overall sublease availability had been as low as a miniscule 1,508,783 square feet in May 2000.

The big question: Will sublet availability continue its improvement? Financial services firms in New York City are beginning to, once again, hand out pink slips (take your pick of reasons—dysfunction in D.C., Dodd-Frank, euro zone). If the economy doesn’t right itself soon, the contagion will spread even deeper into other sectors. The best estimate, at this point, is that the upset will not be overly severe (i.e., not a double-dip recession) and though there may be a bit of ebb and flow in sublet availability for the next few months, there will not be a sharp increase. Stay tuned.